How an insurance broker can piss off its customers in 4 short paragraphs

It’s that time of year again… when the broker that handles my house insurance pisses me off by sending me a letter reminding me of what bad customer service is.

The letter reads:

Dear Aaron:

Re: Policy xxxxxxxxxxxx

I am pleased to offer renewal of your policy which presently expires on April 15, 2011. The information I have on file would suggest coverage of at least $xxxxxxxx on your dwelling this year. Based on this amount, the premium for renewal is $xxxx.

You currently have $xxxx sewer back up coverage. If you have installed a sump pump and back flow value you are eligible to increase this limit. Please call me at your convenience to discuss this.

I recommend that you review your current policy, taking note that there are limits of insurance for unscheduled items such as jewellery, furs, bikes, stamp and coin collections, etc.

xxxxx is a full service insurance office insuring homes, cottages, apartments, condominiums, boats and motors, aircraft and all classes of business as well as AUTOPAC and TRAVEL insurance.

I look forward to hearing from you soon.

Sincerely

xxxxxxxx

We are now on the web. Visit us online at xxx.xxxxxxxxxxx.xxx

Let’s ignore the grammatical errors in the letter and the redundancies in the PS.

Here are some of the problems I have with this letter:

In paragraph 1, they start out with the amount that I owe. Boom. Like a slap in the face. The way it’s positioned reminds me that our relationship is based on money. I am just a policy payment to them. (That may be true for many businesses, but customers don’t want to feel that way).

In paragraph 2 and paragraph 3, they remind me of how they are limiting coverage. After they’ve asked for my money. :(

In paragraph 4, they tell me they are a “full service” company and then they list their products. After reminding me how much I am paying them and telling me how much they are limiting my coverage, this 4th paragraph is a too-little, too-late attempt to get me to buy more coverage from them.

It’s really not the letter itself that pisses me off, I guess. Rather, it’s what this letter stands for: I don’t actually feel like a customer. I am a policy and an annual policy payment.

They shouldn’t be surprised that I have absolutely no loyalty to them. They have done nothing to win my loyalty. And I’m sure I’m not alone. This isn’t a problem with this specific broker alone; it’s a problem that is common in the insurance industry.

Here’s what I would recommend if they wanted to know how to keep me as a customer:

Start the letter by telling me that I’m a valued customer.

Rather than just sending me an invoice disguised as a letter, why not send me a real letter (a friendly one) with an invoice. Separate the pain and use the letter to make me feel special.

Remind me about what I am getting. Insurance is one of those tricky sales because you pay but don’t actually see the benefit until something bad happens. However, that coverage is still a tangible, quantifiable thing and it should be highlighted in the letter so it feels like I actually “got something” for my money. (Got something other than “screwed”, which is how a lot of people feel when they pay for insurance).

I understand that you are probably required by law to mention coverage limits. However, this can be done in a nicer way, and it doesn’t have to take up 2 of your 4-paragraphs. (If you take my earlier advice and send an invoice with the letter, include it on the invoice).

Send some free information. There’s a lot of info out there and, as a homeowner, I would love to know more. Maybe send me something that not only benefits me but could also benefit you down the road. For example, why not send a few helpful how-to brochures produced in conjunction with a local home improvement store about how to improve the value of my home. (Heck, why not throw in a coupon for 25% off a can of paint?) I end up with some ideas to make my home better, and next year you can talk to me about how my higher-valued home needs more insurance.

If you are going to limit my coverage, at least tell me what I can do about it. I’m sure there are extension policies that can be purchased for all of the fur coats I own (or whatever). Or, if I’m worried that my fur coats might not be covered, why not suggest a fur storage place in town (and set up a reciprocal customer agreement with kickbacks) where my fur coats will be safe and insured. (BTW, I don’t actually own any fur coats. That’s not how I roll).

That’s what I would suggest for the letter. Now here’s what I would suggest in general if they ever asked about how to make me a loyal customer:

If you want to win my loyalty, you need to remind me over and over why I’m a customer. It’s NOT because you’re “a full service insurance company”. Rather, it’s because I think my house is awesome and I want to protect it.

Pick up the phone and give me a call a couple of times through the year. Touch base. Keep it friendly. Ask about the wife and the business. When I mention that I’m traveling to the UK, it’s okay to casually mention that you have travel insurance. But keep those offers casual and relevant. There’s a reason that, in the past 7 years I’ve had my house insurance with you, I have never EVER thought of asking you to provide my life insurance or business insurance. It never crossed my mind

Send something a couple of times a year. Nothing extravagant. Flowers. A card. A calendar. A fridge magnet. Even information is nice (and probably costs you less but would be more highly valued by me if it were carefully chosen). I don’t mean that this should be all about free gifts; rather, I’m trying to suggest that you add value and remind me that I’m more than a policy. (You could have sent a bottle of sparkling non-alcoholic wine when I first bought my house insurance from them, by the way).

Every day on TV we see commercials for insurance companies who are battling with each other over price. Each one claims to offer lower prices than the last. There’s a reason that they are fighting about price. It’s because everything else about their companies are so similar and they haven’t been able to differentiate themselves in any other way. This is true not only for insurance companies but for the brokers who sell their policies.

And to my insurance company: The check is in the mail. But it could be the last.